Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Fifth Circuit: Subchapter V Corporate Debtors Are Subject to Discharge Exceptions
In the case of Avion Funding v. GFS Industries (In re GFS Industries), 99 F.4th 223 (5th Cir. 2024), the U.S. Court of Appeals for the Fifth Circuit held that corporate debtors that elect to proceed under Subchapter V of Chapter 11 are, pursuant to Section 1192 of the Bankruptcy Code, subject to the discharge exceptions set forth in Section 523 of the Bankruptcy Code. In so holding, the GFS court agreed with the U.S. Court of Appeals for the Fourth Circuit, the only other circuit court to address this issue, in the case of Cantwell-Cleary v. Cleary Packaging (In re Cleary Packaging), 36 F.4th 509 (4th Cir. 2022).
|Background
In the GFS case, the debtor, GFS Industries LLC, entered into an agreement with Avion Funding LLC. pursuant to which Avion loaned money to GFS. To secure this obligation, Avion obtained a lien on certain of GFS's future receivables. As part of the agreement, GFS represented to Avion that it did not anticipate filing for bankruptcy. However, two weeks after signing the agreement, GFS filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Western District of Texas. In its bankruptcy petition, GFS elected to proceed under Subchapter V of Chapter 11.
Avion filed a complaint against GFS in its bankruptcy case claiming that GFS fraudulently obtained Avion's financing by misrepresenting whether it anticipated filing for bankruptcy. In its complaint, Avion sought a declaration from the bankruptcy court that GFS's debt to Avion was nondischargeable due to these misrepresentations. GFS moved to dismiss Avion's complaint, arguing that the dischargeability exception on which Avion sought relief only applies to individual debtors.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
'Huguenot LLC v. Megalith Capital Group Fund I, L.P.': A Tutorial On Contract Liability for Real Estate Purchasers
In June 2024, the First Department decided Huguenot LLC v. Megalith Capital Group Fund I, L.P., which resolved a question of liability for a group of condominium apartment buyers and in so doing, touched on a wide range of issues about how contracts can obligate purchasers of real property.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
CoStar Wins Injunction for Breach-of-Contract Damages In CRE Database Access Lawsuit
Latham & Watkins helped the largest U.S. commercial real estate research company prevail in a breach-of-contract dispute in District of Columbia federal court.
The Power of Your Inner Circle: Turning Friends and Social Contacts Into Business Allies
Practical strategies to explore doing business with friends and social contacts in a way that respects relationships and maximizes opportunities.